Politically Direct: State Rep.Warren Kampf proposes pension reform

NORRISTOWN — State Rep. Warren Kampf (R–157th Dist.) met with The Times Herald editors Thursday to discuss pension reform for state and public school employees.

Kampf’s proposed bills, HB 1352 and 1353, will redefine pension plans for all new state and public school employees to include defined contribution plans. According to Kampf, the goal of this reform is to combat the current pension crisis facing Pennsylvania, which amounts to a combined $49 billion of underfunded pension costs.

“The financial health of the state and school districts is not very good.”

“The way I designed it is a defined contribution plan for newcomers,” Kampf said. “It mandates that they contribute 4 percent of their salary and it’s portable so they can take it with them.”

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State and public school employees currently have defined benefits packages based off of their salary, unlike employees of private businesses that typically offer 401(k) pension plans that rely on market fluctuations. When a state or school employee retires, they currently receive a portion of the salary that they had in the last years of their employment.

“Every time you add someone to the plan you’re saying this mess is okay,” Kampf said, referring to the current pension system.

Kampf said the burden of the crisis is unfairly laid on taxpayers, who contribute 60 percent of pension costs.

Kampf predicted that pensions will cost taxpayers $500 million a year of upward steps in the state budget in the years to come, which he said puts upward pressure on property taxes and school district’s budgets. “Economic growth is being eaten up by these steps,” Kampf said.

The proposed bills would not take away defined plans of current employees but would give them the option to switch to the proposed defined contribution plans. According to Kampf, current employees might prefer the portability of the new plans because they could take them with them if they switch to a new employer or school district.

Kampf’s bills recently came out of committee.

“It was pretty historic for a new guy like me. The bill was voted out of committee in June,” Kampf said. “I think there is a significant possibility that we’ll do something soon.”

Despite the progress Kampf’s bill has made, he is unsure of the outcome of a vote, should the bills make it to the House floor.

“It’s hard to get 203 people to come together and vote. Right now, I would give it a 50-50 chance,” Kampf said.

“We cannot continue to go through the cycle down the line,” Kampf said. “The great thing of this plan is that it walls off the problem.”